When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a
A)Nash arrangement.
B)cartel.
C)monopolistically competitive oligopoly.
D)perfectly competitive oligopoly.

Question

Quizplus · Accepted Answer

A cartel is a group of firms that collude to restrict output and raise prices in order to increase their joint profits. They typically agree on production quotas and prices, and may impose penalties on members that deviate from the agreed-upon terms. This form of organization is illegal in many countries, as it is considered anti-competitive behavior.

When Firms Have Agreements Among Themselves on the Quantity to Produce